Highlights of the 2003 Report on Socially Responsible Investing Trends in the United States

1
Highlights of the 2003 Report on Socially
Responsible Investing Trends in the United States

• Social Investment Forum
• http//www.socialinvest.org
• [phone]

2
What is Social Investing?

• Socially responsible investing (SRI) is an
  investment process that considers the social and
  environmental consequences of investments, both
  positive and negative, within the context of
  rigorous financial analysis.

3
Three Strategies of Socially Responsible Investing

• Screening The practice of including or
  excluding publicly traded securities from
  investment portfolios or mutual funds based on
  social and/or environmental criteria.

• Shareholder Advocacy Actions socially aware
  investors take in the role as owners of
  corporations, including dialoguing with companies
  on issues of concern, as well as filing and
  voting proxy resolutions.

• Community Investing The flow of capital from
  investors to communities that are underserved by
  traditional financial services. It provides
  access to credit, equity, capital, and basic
  banking products.

4
2003 Trends Report Highlights

• A total of 2.16 trillion in assets were
  identified in professionally managed portfolios
  using one or more of the three core SRI
  strategies
• Screening
• Shareholder Advocacy
• Community Investing
• More than one out of every nine dollars under
  professional management in the United States
  today is involved in socially responsible
  investing.

5
Socially Responsible Investing in the U.S.
2.16 trillion in 2003
6
Growth of SRI Investments ( Billions) 1997-2003
7
2003 Trends Report Highlights

• Assets under management in screened portfolios
  counted by this Report totaled 2.14 trillion and
  rose 7 between 2001 and 2003.
• Meanwhile the broader universe of all
  professional managed portfolios fell 4 during
  the same time period.

8
2003 TrendsSocially Screened Portfolios

• Assets counted in socially screened separate
  accounts grew by 7 from the 2001 to 2003,
  climbing to 1.99 trillion.
• Assets in socially screened mutual funds were
  151 billion, 11 more than the 136 billion
  counted in 2001.

9
Mutual Fund Screen Types( Billions)
10
2003 TrendsShareholder Advocacy

• Activity Between January 2001 and June 2003,
  shareholder resolution filing increased by 15,
• Social crossover resolutions rose to 310 in
  2003 from 269 in 2001
• Assets The amount of money controlled by
  investors involved in shareholder advocacy
  decreased from 897 billion in 2001 to 448
  billion as of June 2003. Of this
• 7 billion represents assets that are actively
  involved in shareholder advocacy only.
• 441 billion represents assets are both screened
  and leveraged in shareholder advocacy efforts.
• This decline in assets is due to the lack of
  resolutions filed in the past two years by large
  funds such as TIAA-CREF and CALPERS.

11
Three Types of Resolutions

• Social Responsibility address social and
  environmental issues
• Corporate Governance address board, accounting,
  and executive issues
• Crossover -- incorporate both corporate
  governance and social policy/corporate
  responsibility concerns

12
Key Shareholder Successes in 2003

• American Electric Power, Caterpillar,
  ConocoPhillips, Duke Energy, Dynegy,
  Georgia-Pacific, Ingram Micro, Marathon, MBNA,
  Mirant, TXU, and Wal-Mart
• Sexual orientation non-discrimination policies

• American Electric Power, Chevron Texaco, General
  Electric, Southern, TXU, ExxonMobil, Staples,
  Gillette, and Reebok
• Greenhouse gas emissions reductions and
  reporting and renewable energy investment.

• American Power Conversion, Danaher, Gentex, and
  Grant Prideco
• Board diversity

13
Corporate Governance Resolutions

• 900 billion in assets tied to corporate
  governance resolutions
• Options expensing, poison pill, and auditing
  issues have grown in popularity in recent years
• Corporate governance resolution assets are not
  counted in the Trends Report totals

14
2003 TrendsCommunity Investing

• Community Investing grew significantly to 14
  billion in 2003, 84 more than 2001.
• Assets in all CDFI-certified vehicles grew by
  more than 50 from 2001 to 2003, with the
  greatest growth among Community Development
  Banks, which surged over 130 to 7.2 billion in
  2003.
• Increasing numbers of SRI professionals are
  allocating at least of their investment
  portfolios under management to community
  investing. Today, participating Forum members
  have dedicated 1 billion in assets to community
  investing.

15
The Impact of Community Investing

• Community investing creates opportunities for
  housing, jobs, and social services in low-income
  communities
• Community investing dollars are at work in urban
  and rural communities in the US and abroad
• Community investing helps low-income individuals
  and communities take control of their own
  financial destinies

16
The 1 in Community Campaign

• Dramatically increasing the assets devoted to
  community investing, by encouraging investors to
  shift at least 1 of their investment dollars
  into community investing.

Social Investors
Capital to under-served communities
Social return financial return
Community Investments
17
Global Trends in SRI

18
The Social Investment Forum, Ltd.

• National, non-profit membership association of
  the Socially Responsible Investing (SRI)
  Industry.
• Dedicated to advancing the concept, growth and
  practice of SRI.
• Membership includes over 500 social investment
  practitioners and institutions.
• www.socialinvest.org